Home / Economy / Tea Board of India set for overhaul as exports falter

The 70-year-old Tea Act is headed for an amendment aimed at overhauling the Tea Board of India amid falling tea exports worsened by the Ukraine crisis, according to senior government officials.

The amendment of the 1953 Act will come at a time when the domestic tea industry is facing further challenges from the Russia-Ukraine conflict, with Moscow being India’s second largest tea market. The draft amendment bill proposes to bring changes to the functioning of the tea board, so that it can act more as a facilitator than regulator.

“Several obsolete provisions will also be removed from the Tea Act 1953. The proposed bills will promote ease of doing business and increase India’s footprint in the world market," said a senior government official.

India’s department of commerce is currently consulting with major tea exporters, workers unions, small growers’ associations and auctioneers with the deadline for submission of comments having been extended by a month to 9 April.

Tea exports are expected to dip further as Russia, one of the largest importers of Indian tea, is facing sanctions from western countries, giving rise to fears among Indian tea exporters that the country may not be able to pay for the tea. The value of tea exports has slipped from $828 million in 2012-13 to $785 million in 2017-18 to $700 million in 2020-21. In the April 2021 to January 2022 period, India’s outbound shipments of tea were down 2.21% to $628.55 million compared with $642.74 million in the corresponding period last year.

Commerce and industry minister Piyush Goyal told the Lok Sabha on Wednesday that exports of tea, among other products such as pharmaceuticals, telecom instruments and marine, could be affected due to the ongoing Russia-Ukraine conflict.

Experts said tea exports have already been suffering owing to quality issues and competition from Kenya and Sri Lanka. Tea exports to Russia were falling even before the Russia-Ukraine conflict, falling to $88.9 million in 2020-21 from $120 million in 2017-18.

The outgoing deputy chairman of the Tea Board India K.N. Raghavan told Mint Indian tea is not matching up to the quality demanded in the international market. The entire new production is going in the domestic market. He said the sector is highly regulated and it is important to open it up. He added that the tea workers in West Bengal make as little as 200 per day while those in Kerala earn twice as much.

Queries emailed to the spokesperson for department of commerce on Thursday remained unanswered till press time.

“The key objective of the bill is to make the board to act as a facilitator rather than the regulator of the sector, with more focus on market development and branding, quality and testing, research value addition, export-oriented production," the government official cited above said.

Experts point to the structural problems facing the Indian tea industry.

Biswajit Dhar, professor at Centre for Economic Studies and Planning, School of Social Sciences, JNU said, “There are completely unacceptable labour conditions out there. Tea industry is going through a tough time and India is falling behind countries such as Kenya and Sri Lanka in terms of tea exports. That has been an old problem." He said productivity needs to improve for the revival of tea.

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